Friday, May 25, 2012

Wanted: Health Care Entrepreneurs

The head of the Permanente Federation says innovation is critical to improving U.S. health care.

The current entrepreneurial enthusiasm for innovation in health care is likely to continue regardless of the political fate of the Affordable Care Act, one of the nation's top doctors told a Stanford audience recently.

Jack Cochran, the executive director of the Permanente Federation, the umbrella organization for the 16,000 physicians in Kaiser Permanente, was a lead-off panelist at the Stanford Graduate School of Business’ Healthcare Innovation Summit, sponsored by the school’s Program in Healthcare Innovation. He was interviewed at the conclusion of his panel.

The crowds at the conference were testament to the current interest in Silicon Valley and elsewhere to health care-related innovation. Much of that innovation is being funded by provisions of the Affordable Care Act, which is being challenged both in the courts and at the ballot box. Dr. Cochran said it would be "a shame" if those incentives were eliminated.

He added, though, that there appeared to be enough momentum for innovation to continue. "The bit is already in the mouth of our entrepreneurs," he said. "They understand that they have the opportunity to do something that would be both successful as a business opportunity as well as profoundly impactful for our country."

Even if the ACA was repealed, said Dr. Cochran, "the problems don’t go away. Our health care system is terribly, terribly broken. We are still going to have a problem with access and affordability. A simple solution of vouchers is not going to solve that. So we need the entrepreneurs and we need the breakthroughs."

While encouraging entrepreneurs to continue working on their startups, he also urged them to expand their definition of "success," so that it includes factors beyond just a profitable exit for investors. Specifically, he urged entrepreneurs to ask whether their product takes cost out of the U.S. health care system, which he identified as one of the system's greatest policy challenges.

"Don’t just find another miracle to add to the system," he said. "In and of itself, that just adds to the cost. I once told the people at Genentech that 'the problem with miracles is that within three years, there are new warnings, new restrictions, new problems, new side effects. So, besides working on the miracle, entrepreneurs need to ask: How can we, over the long term, work on costs?'"